You are no doubt now fully conversant, dear reader, with the findings of the first Financial Conduct Authority thematic review into Retail Distribution Review compliance among advisers.
In short: many of you that are independent are actually not making the grade, many of you that are restricted are misleading your clients on what you actually do, and many of you from either side of the fence are obfuscating on charges.
In fact, so great is the FCA’s concern on some of these issues that alongside the report it quietly uploaded two articles to augment the ‘financial advice’ section on its website.
The first details the types of advice consumers have the option of receiving (clearly you cannot be trusted to explain this to clients yourselves): independent, restricted and the more ethereal ‘other’.
I had an interesting Twitter discussion with an adviser last week questioning why the FCA kept describing three advice categories when it has made it abundantly clear there are only two services an adviser can offer.
I can now clear this up: this latter ‘advice’ category is in fact an oxymoron that covers ‘non-advised’ services or ‘guidance’.
No real surprises aside from this definition disparity, except perhaps the slightest hint that the FCA is promoting the virtues of seeking full, regulated advice.
I’ll let sink in for a second.
Don’t worry, there is no danger of your holiday flight being disrupted by airborne swine. The inferred compliment is backhanded: the FCA actually simply warns that while non-advised may cost less, you cannot later pursue a claim against the firm “if things go wrong”.
The second article seeks to empower clients further to ensure they tease out all of the information to define your service and ensure it is suitable for them.
It tells proposective clients to “plan in advance by pulling together your relevant paperwork, thinking about your financial goals and preparing a list of questions to ask”.
In total there are 11 suggested questions, most of which seem to be designed to confirm that the adviser is RDR complaint and that the client properly understands the service they are providing and how they have to charge for it under the new regime.
Here are the questions, along with a summary of the guidance the FCA offers in each case:
Q1: Are you approved by the FCA?
The regulator warns, again, that clients cannot pursue a Financial Ombudsman Service or Financial Services Compensation Scheme claim against unauthorised advisers.
Q2: What experience and qualifications do you have?
Clients are told to check you are level 4 qualified and have the required statement of professional standing. No doubt it’ll be framed and pride of place on your wall framed anyway.
Q3: What type of advice do you offer?
No ‘other’ this time - or ‘hybrid’ for that matter. You’re either independent or restricted and will be expected to detail this and what it means.